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WIPO Mediation and Arbitration for FinTech Disputes Leandro Toscano Head, Business Development Unit WIPO Arbitration and Mediation Center Oscar Suárez Legal Case Manager

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WIPO Mediation and Arbitration for FinTech Disputes

Leandro ToscanoHead, Business Development Unit

WIPO Arbitration and Mediation Center

Oscar Suárez Legal Case Manager

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In this webinar

• Send your questions

• Download handouts

• Receive webinar recording

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In this webinar

• Why mediation and arbitration for FinTech disputes?

• How to draft efficient dispute resolution clauses for FinTech contracts

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Financial Technologies (FinTech) definition

• “Financial technology describes new technology that is set to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of "financial technology".” (Investopedia, 2020, at https://www.investopedia.com/terms/f/fintech.asp)

• “New entrants that promised to rapidly reshape how financial products were structured, provisioned and consumed.” (World Economic Forum, 2017)

Notes on the current state of the FinTech industry5

• Financial institutions are undergoing important changes to adapt to the digital revolution

• Many players interact with traditional financial institutions• E-retailers• ICT and large technology companies• Social media / Internet platforms• Startups • Financial infrastructure companies

• Financial institutions are the largest investors in the FinTech landscape

Notes on the current state of the FinTech industry

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• Major FinTech startup unicorns in the US and China

• Global movement with different levels according to the market

• Main technologies in demand• Data analytics• Mobile • AI• Blockchain

• Growing landscape of FinTech startups collaborating with traditional institutions instead of competing Source: Statista

Money Transfer and

Payments

Financial Planning

Savings and Investment Borrowing Insurance

China 83% China 22% China 58% China 46% India 47%

India 72% Brazil 21% India 39% India 20% UK 42%

Brazil 60% India 20% Brazil 29% Brazil 15% China 38%

Australia 59% US 15% US 15% US 13% South Africa 32%

FinTech Adoption Rates (% population/country) (2017)

Notes on the current state of the FinTech industry

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• Key issues:• Interconnectivity (e.g., APIs) • Data• Intellectual Property (IP) Rights

• Trends • Open innovation and need to bring stakeholders and third-parties

• E.g., Open banking • Support of financial institutions into new FinTech initiatives• Banking as platform (BaaP)

FinTech and IP8

*Data extracted from CIPHER,’IP Strategy Report’ (2018) CIPHER accessed at: https://cipher.ai/wp-content/uploads/Cipher-IP-Strategy-Report-2018-.pdf

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FinTech disputes

Types of FinTech disputes

• Contractual• IP/IT licensing• software development agreements• software maintenance agreements• service level agreements• outsourcing• joint ventures• performance (e.g., payment)• terms and conditions• data / analytics• interconnection issues

• application programming interfaces (APIs)• mobile apps• artificial intelligence• Blockchain / DLT• smart contracts

• Non-contractual• IP infringements

• Recurrent interaction between multiple stakeholders in FinTech sector • Increased possibility of disputes

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Parties to FinTech disputes

• banks, financial institutions (PSP)• online marketplaces• start-ups• software developers and programmers / Dapp developers• ICT companies• account servicing payment service providers (ASPSPs)• third party service providers (TPPs)

• payment initiation services providers (PISP)• account information service providers (AISP)

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Dispute resolution processAre you involved in a

FinTech dispute?

Start court proceedings in relevant jurisdictions

Follow dispute resolution provisions in contract

WIPO Mediation / Arbitration

In the context of a contract? There is no contract?(e.g., infringement)

Agree with other party to submit dispute to other dispute resolution mechanisms

Contract does not include dispute resolution

provisions?

Contract includes dispute resolution

provisions?

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Mediation• Informal consensual process

• Neutral intermediary – mediator

• assists parties in reaching settlement of their dispute

• based on parties’ respective interests

• cannot impose a decision

• Settlement agreement has force of a contract

• Leaves open court or arbitration options

Arbitration• Consensual procedure

• Parties submit dispute to one or more chosen arbitrators

• Binding and final decision (award)

• based on parties’ rights and obligations

• enforceable internationally

• Normally forecloses court options

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Court litigation vs. Arbitration / Mediation

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WIPO Center Report on International Survey of Dispute Resolution in Technology Transactions

Time and cost of IP dispute resolution

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• 75% of organizations surveyed have a dispute resolution policy • Mediation is the most encouraged mechanism, followed by

arbitration • The three most important elements of arbitration are: institution,

seat, and confidentiality• 92% of respondents consider arbitration well suited to TMT disputes• 82% of respondents foresee an increase in the use of arbitration• Respondents expect ownership of IP and licensing of technology to

continue to be a likely source of disputes, including from “collaboration” and data and system security breaches

2016LT

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World Intellectual Property Organization (WIPO)• Promotes innovation and creativity• For the economic, social and

cultural development of all countries

• Through a balanced and effective international IP system

• WIPO provides IP services that encourage individuals and businesses to innovate and create

• Alternative Dispute Resolution (ADR) services to reduce the impact of disputes on innovation and creative processes

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WIPO Arbitration and Mediation Center• Facilitates the resolution of commercial

disputes between private parties involving IP, through procedures other than court litigation, including mediation and arbitration

• Offices in Geneva and Singapore• Users around the world

• ADR provider specialized in IP and technology disputes

• WIPO mediators, arbitrators and experts experienced in IP an technology (including FinTech) - able to deliver informed results efficiently

• International neutrality

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What is the WIPO Center’s role?• WIPO Center is available to

• provide information and procedural advice • assist parties in considering the referral of a dispute to WIPO

proceedings• assist parties in the selection of specialized mediators,

arbitrators and experts• arrange for support services, including meeting rooms and

videoconferencing facilities

• WIPO Center does not• provide legal advice or represent parties in dispute• force any party to refer a dispute to or participate in WIPO

proceedings

Routes to WIPO ADR

• ADR contract clause • WIPO model clauses: www.wipo.int/amc/en/clauses

• ADR submission agreement (e.g., in existing non-contractual disputes)

• Unilateral request for WIPO Mediation by one party (Art. 4 WIPO Mediation Rules)

• Court referrals

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WIPO Good Offices• Disputes where one or both parties consider submitting the

dispute to mediation or arbitration • No previous agreement on how to resolve the dispute

• Infringements • Cases pending before the courts

• Procedural advice

• No fees at this stage

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WIPO mediation and arbitration cases

Settlement rates

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WIPO arbitration and mediation for FinTech

• Collaboration with FinTech stakeholders in several jurisdictions • Information on WIPO ADR for FinTech

• www.wipo.int/amc/en/center/specific-sectors/ict/fintech

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WIPO ADR Rules (2020)• IP and technology specific elements

• e.g., confidentiality, technical evidence, interim relief

• Applicable to all commercial disputes• Flexibility

• Pre-structure entire proceeding• For most part can be modified by

arrangement between mediator or arbitrator and parties

• For domestic and international disputes• Accommodating different legal/procedural

traditions

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Mediation of FinTech disputes• For contractual and non-contractual disputes

• Voluntary

• Confidential

• Engage FinTech savvy mediator (facilitator)

• Flexible process

• Preserve business relationships

• Mediation agreements may be enforceable under the Singapore Convention (to enter into effect September 20, 2020)

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Principal steps in a WIPO MediationFilling of Request for WIPO Mediation

Mediation Agreement (Article 3 of the WIPO Mediation Rules)

Unilateral Request (Article 4 of the WIPO Mediation Rules)

Appointment of Mediator

Parties conclude Mediation Agreement

Parties do not conclude Mediation Agreement

Initial contacts between Mediator and parties

Set up mediation meeting Agree on preliminary exchange of documents, if any

Mediation meeting

Agree on ground rules of the processGather information and identify issues

Explore the interests of the partiesDevelop options for settlement

Evaluate options

Conclusion of Mediation

Settlement Agreement Termination of Mediation

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Arbitration of FinTech disputes• For contractual and non-contractual disputes

• Voluntary

• Confidential

• Engage FinTech savvy arbitrator(s) (decision maker(s))

• Technical evidence (e.g., preservation of trade secrets and confidential information)

• Final and binding (no appeal)

• Awards enforceable under the New York Convention

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Principal steps in a WIPO Arbitration

One exchange of pleadings Shorter time limits Sole arbitrator Shorter hearings Fixed fees

WIPO Expedited Arbitration

Request for Arbitration and Statement of Claim

Answer to Request for Arbitration and Statement of Defense

Appointment of Arbitrator

Hearing

Closure of Proceedings

Final Award

WIPO Arbitration

Request for Arbitration

Answer to Request for Arbitration

Appointment of Arbitrator(s)

Statement of Claim

Statement of Defense

Hearing

Closure of Proceedings

Final Award

Further Written Statements and Witness Statements

Why consider WIPO ADR for FinTech disputes?

• Cost and time of court litigation• Short product and market cycles in FinTech

• International FinTech transactions• ADR offers cross-border solutions• Consolidate disputes in one procedure

• Technical and specialized nature of FinTech• Expertise of WIPO mediators and arbitrators

• Confidential nature of FinTech disputes

• Collaborative nature of FinTech development• ADR can preserve commercial relations

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WIPO Center’s case experience in FinTech

• WIPO Mediation of patent and software dispute• EU and US Licensee v. German Licensor

• Whether the German company infringed the patents and software licensed under an agreement for the manufacturing of smart personal identification cards and related software

• WIPO Arbitration of software dispute• US AISP v. Asian PSP (financial institution)

• Dispute to breach of service agreement exclusivity by PSP with the US AISP

Some dispute resolution developments in FinTech• WIPO ADR for Blockchain

• First instance juror committee • WIPO Expedited Arbitration for contractual disputes (and appeals)• De-centralized apps – Open Source

• European case regarding online platforms assisting users create Bitcoin

loans between them• Contract provisions contain automatic arbitration

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Some dispute resolution developments in FinTech

• Codes of Best Practices for Dispute Management System (DMS) in Open Banking between ASPSPs and TPPs

• Internal DMS followed by mediation or arbitration • Blockchain Arbitration Forum: WIPO Arbitration and WIPO Expedited

Arbitration Clauses, option to request hearings via video conference http://blockchainarbitrationforum.org/dispute-resolution/arbitration-clauses/

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WIPO ADR model clauses

www.wipo.int/amc/en/clauses

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Clause example for your FinTech contract: mediation followed by expedited arbitrationAny dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be submitted to mediation in accordance with the WIPO Mediation Rules. The place of mediation shall be [specify place]. The language to be used in the mediation shall be [specify language].

If, and to the extent that, any such dispute, controversy or claim has not been settled pursuant to the mediation within [60][90] days of the commencement of the mediation, it shall, upon the filing of a Request for Arbitration by either party, be referred to and finally determined by arbitration in accordance with the WIPO Expedited Arbitration Rules. Alternatively, if, before the expiration of the said period of [60][90] days, either party fails to participate or to continue to participate in the mediation, the dispute, controversy or claim shall, upon the filing of a Request for Arbitration by the other party, be referred to and finally determined by arbitration in accordance with the WIPO Expedited Arbitration Rules. The place of arbitration shall be [specify place]. The language to be used in the arbitral proceedings shall be [specify language]. The dispute, controversy or claim referred to arbitration shall be decided in accordance with [specify jurisdiction] law.

www.wipo.int/amc/en/clauses

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Some pointers on mediation and arbitration clauses• Combine options

• Include mediation• Like court cases, mediation and arbitration cases get settled

• If arbitration, consider an expedited version

• ‘Institutional’ or ‘ad hoc’?• Hard to agree on procedure once dispute arisen• Do you know suitable mediators or arbitrators?• Which administering institution?

• Use model clauses as basis and modify/extend only as necessary• Do not divide per type of right, remedy, dispute, or party case

status• Consider expressly excluding discovery and similar mechanisms

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www.wipo.int/amc-apps/clause-generator

Unilateral Request for WIPO Mediation

• Request for WIPO Mediation by one party in the absence of a mediation clause (Art. 4 WIPO Mediation Rules)

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Join the Pledge!

400+ signatories from

90+ countries

www.wipo.int/amc/en/mediation/pledge.html

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Contact us• Queries: [email protected]• Further information: www.wipo.int/amc

• WIPO Arbitration and Mediation Center Offices• Geneva, Switzerland• Singapore, Singapore

• WIPO External Offices• Algiers, Algeria• Rio de Janeiro, Brazil• Beijing, China• Tokyo, Japan• Abuja, Nigeria• Moscow, Russia• Singapore, Singapore

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References

• https://cipher.ai/wp-content/uploads/Cipher-IP-Strategy-Report-2018-.pdf

• https://justcoded.com/blog/the-impact-of-fintech-on-banks-and-financial-services/

• https://www.investopedia.com/terms/f/fintech.asp

• http://www3.weforum.org/docs/Beyond_Fintech_-_A_Pragmatic_Assessment_of_Dis

ruptive_Potential_in_Financial_Services.pdf

• https://medium.com/the-centre-for-finance-technology-and-entrepreneur/what-is-finte

ch-what-are-some-definitions-of-fintech-ddffebd98c1d

• https://www.ey.com/Publication/vwLUAssets/ey-fintech-adoption-index-2017/$FILE/e

y-fintech-adoption-index-2017.pdf

• http://www3.weforum.org/docs/Beyond_Fintech_-_A_Pragmatic_Assessment_of_Dis

ruptive_Potential_in_Financial_Services.pdf